Bion PLC BiON enters the Solar Power Market (1620I)
December 10 2020 - 2:00AM
UK Regulatory
TIDMBION
RNS Number : 1620I
Bion PLC
10 December 2020
10 December 2020
BiON plc
("BiON" or "the Company")
BiON enters the Solar Power Market
Establishment of solar PV subsidiary and acquisition of solar
assets
BiON (AIM: BION), an environmental engineering, wastewater
treatment and renewable energy solutions company, announces that is
has entered into the solar photovoltaic ("PV") market with the
establishment of BiON Suria Sdn Bhd ("BiON Suria"), a solar-focused
subsidiary, and its conditional acquisition of solar assets. This
represents the first expansion of the Company's activities into
renewable energy sectors beyond biogas, in line with its stated
strategy.
Establishment of solar PV subsidiary
BiON Suria has been established to expand the Company's
activities into the solar PV market, which the Board believes
offers great potential as an incremental revenue stream. The
Malaysian government is supporting the growth of the industry with
several incentives and initiatives as it seeks to achieve its
target of renewable sources accounting for 20% of the national
energy mix by 2025. In late 2018, the government introduced the Net
Energy Metering ("NEM") programme where any excess power generated
by solar panels can be sold to the national utility company, Tenaga
Nasional Berhad ("TNB"). In its COVID-19 economic relief package,
the government announced approximately US$2.9bn in expenditure for
the installation of new grids, LED street lights and rooftop solar
panels. Alongside the NEM programme, the government also introduced
the Large Scale Solar ("LSS") competitive bidding programme for the
development of large scale solar PV plants.
Malaysia is well suited for the generation of solar PV thanks to
the availability of sufficient sunlight and irradiance levels, and
it is estimated that there are over four million buildings with
rooftop solar potential in the peninsula. As a result, and with the
backing of the government, the electricity generated by solar PV is
expected to increase from 194 GWh today to 13,540 GWh by 2050.
The Company intends to leverage this market opportunity
primarily through strategic acquisitions where it can purchase
existing assets, at an attractive value, that have completed the
Feed-in-Tariff ("FiT") bidding process and secured a power purchase
agreement. As such, these acquisitions are expected to be
immediately earnings accretive and support the Company's cash flow
on completion. This would strengthen BiON's financial position
while it continues to develop its pipeline of other renewable
energy assets. The Company also intends to participate in selective
opportunistic projects and partnerships.
BiON Suria is a wholly-owned subsidiary of BiON Ventures Sdn
Bhd, which is wholly owned by BiON plc.
Acquisition of solar assets
The Company has completed its first transaction in the solar PV
market with the conditional acquisition, through BiON Suria, of a
77% interest in the right-of-use assets of rooftop solar panels
that supply 0.95MW to TNB under the NEM programme. The assets have
been acquired for a purchase consideration of RM6m from Motion
Ventures Sdn Bhd, a construction company. The initial payment of
RM200,000 was made on signing with RM400,000 due on fulfilment of
the conditions precedent ("Second Payment") and the remainder due
periodically over the 12 months following Second Payment.
The solar PV panels are atop 54 religious buildings (mosques and
suraus) in the state of Perak and in the Sandakan district in the
state of Sabah. They have long-term power purchase agreements in
place, at attractive FiT rates, with the majority expiring in Q4
2040 and a small number in Q4 2038. The Company expects to
recognise approx. RM0.9m in revenue and RM0.4m in profit after tax
from these assets per annum, commencing from 2021.
Datuk Syed Nazim bin Syed Faisal, CEO of BiON, said: "The
establishment of our BiON Suria subsidiary and acquisition of solar
PV assets marks an important milestone for BiON as we enter into a
new renewable energy sector for the first time - delivering on our
stated strategy to diversify our portfolio. We believe solar PV
offers great potential for supporting our cash flow while we
continue to focus on developing our biogas power plants and
expanding into further waste-to-energy activities. The solar PV
opportunity is demonstrated by this acquisition, which is earnings
accretive and provides a secure income for the next 20 years. With
the solar market in Malaysia expected to grow substantially,
supported by government incentives, we look forward to expanding
our portfolio in this sector."
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the EU Market Abuse Regulation (596/2014).
Enquiries:
BiON plc
Datuk Syed Nazim bin Syed Faisal, CEO +603 6413 1085
Fakrizzaki Ghazali, CFO
www.bionplc.com
Beaumont Cornish Limited (Nominated Adviser)
Roland Cornish, Felicity Geidt +44 20 7628 3396
Optiva Securities Limited (Broker)
Vishal Balasingham +44 20 3137 1903
Luther Pendragon (Financial PR Adviser)
Claire Norbury +44 20 7618 9100
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